Air Canada And IAM Extend Contract Agreement

Air Canada and the International Association of Machinists and Aerospace Workers (IAM) announced today that they have reached an agreement with respect to a further collective agreement effective from June 23, 2002 until June 18, 2005.

“I am very proud of our IAM employees for the leadership role they are taking in support of Air Canada,” said Robert A. Milton, President and Chief Executive Officer. “By extending our current agreement an additional three years, the IAM are declaring unequivocal support for Air Canada`s solution, for the benefit of Air Canada`s shareholders, employees and customers well into the future.”

“The tentative agreement reached this week includes improved job security and benefits for our members, and at the same time provides an opportunity for long term labour peace,” said Jim Coller, Negotiations Committee Chairperson. “This combination should allow the company to go forward with assurance of our support.”

On August 2, 1999, the membership of the IAM ratified a three year agreement, effective June 13, 1999, running to June 22, 2002. Today`s agreement which is valid until June 18, 2005 includes wage increases of 2.5% in June 2002, 2003 and 2004, as well as commitments regarding employment concerns and voluntary severance and early retirement incentives.

The IAM represents approximately 8,400 maintenance, ramp, purchasing and cargo employees at Air Canada.